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Effective tax planning is essential if you are to minimise your tax bills. Simple tax planning can significantly reduce your tax liabilities.
The self-assessment tax return is an unavoidable burden if you are liable for self-employed tax or have complicated income tax affairs.
Corporation tax is charged on a company's profits. If you trade as a limited company, ensure that paying this tax is as painless as possible.
National Insurance Contributions (NICs) are payable whether you are self-employed or employed by your own company, although different rates apply.
As well as your legal obligations, you’ll want to ensure that payroll is painless and that you use any opportunities to improve your tax-efficiency.
Effective VAT planning aims to ensure that VAT is relatively painless, and that you are reclaiming as much as possible of the VAT you pay.
Capital gains are made when you sell something for more money than you paid for it. As a result, you can be subject to tax. Take professional advice.
Business property taxes apply to businesses with commercial premises.There are two commercial property taxes: business rates and stamp duty land tax.
If you have tax problems or face a tax investigation, it pays to seek professional advice and you must act rather than just hoping for the best.
Capital gains are made when you sell something for more money than you paid for it. As a result, you can be subject to tax. Capital gains tax allowances and capital gains tax rates are determined by whether you are an individual or a company.
Effective capital gains tax planning aims to minimise such payments by taking advantage of capital gains tax allowances and reliefs to create a low effective capital gains tax rate.
Rules can be complicated, so take professional advice from your accountant.
Capital gains tax (CGT) applies to any gains you make when you sell assets such as land or investments. The assets could be business or personal, although some personal assets are exempt (including your main home). If you make gains on some assets and losses on others, CGT applies to the net overall gain made.
The annual capital gains tax allowance reduces the amount of tax you must pay. You only pay CGT on the amount by which your gains exceed this allowance (if at all). The capital gains tax allowance for 2017/18 is £11,300.
Other reliefs can also reduce or defer CGT for individuals. These include Entrepreneurs’ relief for individuals selling part or all of their business and Business Asset Rollover relief, if you reinvest gains in other business assets.
The capital gains tax rate that UK individuals pay depends on their total income and is usually 10% or 20% (reduced from 18% and 28% respectively from April 2016). If your gains qualify for Entrepreneurs’ relief, the capital gains tax rate is only 10%.
CGT is collected through the self-assessment system; you provide details on your self-assessment tax return.
Capital gains made by companies are treated differently and are usually referred to as chargeable gains.
There is no capital gains tax allowance for chargeable gains, but you can claim an indexation allowance. This reduces the chargeable gain by allowing for inflation.
If a chargeable gain is reinvested in other business assets, it may be possible to roll over the gain, deferring the tax liability. Alternatively, you may be exempt from capital gains tax if your gain is invested in shares under the Enterprise Investment or Seed Enterprise Investment Schemes.
Chargeable gains are subject to corporation tax (unless they are exempt under one of the Enterprise Investment Schemes) and are included on your corporation tax return. So the capital gains tax rate UK companies pay on chargeable gains (after indexation) is their corporation tax rate.